How hacking away at the unessential reveals the path to financial independence.

By Brad Beckstrom

I thought I’d always been good with money, but in 2008, things were starting to hit the shitter. Stock market declines were on their way to a 40% drop. Real estate was headed in the same direction. I was running a small business and weaving my way through the craziness.

Just like I learned in 2000, there’s not much you can do about paper losses. In fact, the more investment moves you make during a correction or bear market, the more damage you can do. It’s far better to be prepared and have a strategy, before a bear market, helping you avoid bad decisions.

Why am I talking about 2000 and 2008 in 2018? Well, we know that recessions and bear markets come along with some regularity. Now is the best time to make sure you’re prepared for the next market decline. The good news is there are only a few very important steps in this process.

Track every dollar that comes into and goes out of your life.

Give yourself a pay cut and invest the difference every month.

Build up a 1 year emergency fund that allows you to ride out the storm, and avoid selling off investments.

I was fortunate enough to stumble across the book “Your Money or Your Life” around 1993. After reading it a couple times, I had a deep understanding of the importance of tracking my expenses and investments with the end goal of financial independence. A few years later, I upgraded my computer and received a demo copy of Quicken. The difference between Quicken and some other home budgeting applications at the time was the availability of downloads from both my bank and my brokerage. This was a game changer for me. I’d been far too lazy to enter transactions in the past and absolutely hated reconciling my checking account.[Read more…] about Beat Last Year.

Who knew? That’s what I keep telling myself. When I was in my 20s, I drew a circle around the Washington DC Metro area including Northern Virginia, Baltimore, the Eastern Shore, and surrounding areas. I said, “This is where I will live. This will be my zone of influence.” (I actually said that. Not sure why, maybe it was business related, or I was reading some Dale Carnegie books at the time). Little did I know that red circle I drew encompassed 4 of the 5 richest counties in the United States and 6 of the top 10. Literally, all within a one hour radius of Washington, DC. This area really does make San Francisco and Silicon Valley look like chump change. LA, New York, Honolulu, forget about it. Washington, DC is where (a lot) of the money is. Not convinced? Just take a look at the U.S. Congress and the money machine that supports it.

There are some advantages to living in a wealthy part of the country: jobs, great schools, museums, sports franchises, bays, lakes, rivers, beaches, mountains all nearby. So, it’s a great area to live right? Unfortunately, a lot of people feel that way. So, not only are we beating LA and New York in spendyness, we also regularly beat them with some of the worst traffic in the country. Real estate is equally ridiculous, along with property taxes. High-paying jobs and expensive real estate spillover into everything. Most restaurants are fancier and more expensive. Real dive bars and affordable local spots are getting harder to find, often being priced out of their locations even in the close in suburbs. Everybody, grocery stores, retailers, parking garages, jacks up their prices because they can (or need to.) Good deals become harder to find.

When I start comparing Arlington, Virginia to cities like Raleigh, North Carolina, Tampa, Florida or Boulder, Colorado using online calculators (links below), I start to see a trend. Housing is really driving the majority of cost-of-living differences on these these calculators. I’ve tried to use other online comparison calculators (see list) but once they add housing, it throws everything off. For instance, it might say something like a $100,000 salary in DC is worth $170,000 in Raleigh, but this has very little to do with the price of milk or taxes and everything to do with the fact that house in the DC area will cost you 3X.

When I started saving in my mid-20s I was not aware of the term “financial independence.” I was, however, very aware of the word “freedom.” I was never good at following orders. I likely would have struggled in the military or working for anyone who wanted things done a specific way. On the other hand, left to my own devices, I was very interested in making my own plans and setting personal goals. Secretly I was a bit of a self-improvement junkie. When I got my first real job out of college, I signed up for every class offered by my employer’s training department. Time management, presentation skills, Brewing 101. Well, I worked for a brewery. It seemed I was a much better student after college, devouring course materials and finding great books on my own.

Simple Money Habit #1

So, in a nutshell, that’s the first simple money habit: Lifelong learning. I’ve always put that first because regardless of how much money you’re able to save, the most important investment you can make is in your own development is you. Kevin Kelly, founder of Wired Magazine, once said “just read one book a month and it will change your life.” He’s right.

Simple Money Habit #2

Lifelong learning goes beyond reading and classes, it’s really also about asking questions. When I was calling on clients at my first real job, I was asking questions about their business, franchising ideas, what worked for them. Simple Money Habit #2: Ask Questions. This started early for me, even asking my grandmother if I could see her stock certificates or figure out how her calculator worked. Now I can get a lot of answers on Google, but the ones that are the most helpful come directly from people with experience.[Read more…] about Seven Simple Money Habits I Used to Achieve Financial Independence.

Everybody’s got stuff. Not the stuff you might be thinking, like knickknacks, or closets full of junk. I’m talking about the stuff in your head. It’s something we all have. Those thoughts and worries that creep in. They can keep you up at night or distract you during the day. This stuff is not unique to people based on age, race, marital status, or station in life. In fact, it can be argued that the healthy and the wealthy often have even more of this stuff. As rapper notorious B.I.G. famously said “Mo Money = Mo Problems.” He had them both, and he was dead at 25.

Sometimes I’ll be on a great walk listening to a podcast or an audiobook and find that I missed entire parts of it as my mind wanders off and goes to this “stuff.” Sometimes other people’s stuff creeps into my head. Things I have absolutely no control over, but there they are, pissing me off.

One thing that makes me feel better is understanding that everybody has this stuff in their head, worrying about a family member, their health, some work-related issue, or something that popped up in a random tweet. You know the feeling, “WTF, that can’t be true, how can they do that! Let me see that link, let’s dive in so we can worry more about this.”[Read more…] about How to Banish Worry and be Thankful Everyday.

There’s this constant buzz, the stock market is overvalued, a major crash is coming, interest rates are going up, homes are overvalued. If you read all of these headlines, you get the feeling there are no “truly safe” investments. If you’re striving for financial independence, these types of alerts and headlines can really get to you. They used to really bother me.

Over the past few years I’ve been steadily working on what I call the high quality, low information diet. The 2016 election set me back a bit, but I’m on the road to recovery. The news notifications are off, emails are being rounded up and unsubscribed, I’m getting higher quality news and information on my own terms.

Traditional Investing

If we can free up time, by removing distractions, then we can invest it elsewhere. Let’s start with traditional investing. I used to subscribe to multiple investing e-mail newsletters. I think I even paid for a few of them! I’ve unsubscribed manually, and using a tool called unroll me. Once in awhile they still find me and I marvel at all of the investing advice out there. Everything from, microcap stocks, crypto currencies, precious metals, the list goes on. What I take away from this deluge of information now, is to go in the opposite direction. Instead of expanding into new areas of investing I’ve chosen to vastly simplify my investing strategy, 4 low fee index funds, freeing up even more time for safer investments.

Years ago I had a vision for what I’d like my future home to look like. It included stylish mid-century modern furniture, expensive rugs, artwork, and beautiful lighting. It doesn’t look like that and I’m happy about it. Instead of replacing and upgrading furniture over the years, we decided to keep the furniture we had. This included things like our original coffee table that’s been destroyed by kids, dogs, spilled beverages. I kept my furniture from my college dorm room, now in my son’s room and still going strong. We kept various IKEA classics from my various bachelor pads and wife’s early post-college years.The IKEA dressers had to be repaired and in one case reassembled. A few years back, we had a fun day running down to IKEA to dig through the parts bins for pegs, knobs, and brackets. I also grabbed a few Swedish meatballs. We’ve received a few pieces of furniture from relatives over the years, proudly displayed next to the IKEA stuff in the living room that we repurposed as a library.

With all this old furniture populating our home, something interesting began to happen. The furniture began to develop its own personality. Chew marks from pets that are no longer with us, wild rings, marks, and divots in our coffee tables that come along with raising two boys and having pets. I guess you could call them scars, but the good kind. We’ve actually created that distressed, weather battered look the people pay for. I like to think of it as sort of a slow motion destruction.[Read more…] about How To Prefer What You Have.